OpenAI's $300 Donut Has a Trade-Secret Problem. Apple's Lawyer Calls It 'A Few Bad Apples'

Judge Edward Davila said he's 'highly likely' to side with Apple in the trade-secret case. OpenAI fired back hours later with its own allegation: a former Apple employee who went to OpenAI and back to Apple sent 'over a hundred highly confidential files' to personal accounts. The company's flagship hardware product is a $300+ doughnut-shaped speaker.

U.S. District Judge Edward Davila said at a hearing Wednesday he is “highly likely” to grant Apple an injunction barring OpenAI from using alleged proprietary information — a potential first substantive ruling in a case that has put a cloud over OpenAI’s hardware ambitions as it targets a $1.4 trillion valuation and an IPO.

Apple sued OpenAI, its hardware chief, and a former iPhone hardware engineer in July 2026, accusing them of conspiring to extract confidential information from former Apple employees related to product design, manufacturing, component technologies, testing methodologies, and the company’s supply chain. Apple’s position: OpenAI is exploiting that information to advance its efforts to enter the consumer hardware market.

OpenAI’s defense: “OpenAI has no need or desire for Apple’s trade secrets.” The company argues Apple is casting “ordinary job interviews as acts of trade secret misappropriation.”

The numbers:

  • $300+ — Bloomberg’s reported price for OpenAI’s first consumer hardware product: a doughnut-shaped smart speaker
  • $1.4 trillion — OpenAI’s target valuation as it prepares to go public
  • “Highly likely” — Judge Davila’s own words on granting Apple’s injunction request
  • “Huge ask” — What the judge called Apple’s request for a sweeping forensic inspection of all devices containing Apple trade secrets

Hours before the hearing, OpenAI counter-alleged that a former Apple employee — who left Apple for OpenAI and then returned to Apple — had sent “over a hundred highly confidential files” about at least one unreleased OpenAI device to personal accounts. The files included images of unreleased hardware, engineering and manufacturing data, and supplier information. The former employee also presented OpenAI product plans to senior Apple executives, according to OpenAI’s court filing.

Apple’s lawyer, John M. Desmarais, had a response for the judge when he questioned the forensic inspection scope: “They don’t have 400 bad apples, your honor, they have a few bad apples and know who they are.”

The case is Apple v. Liu, 5:26-cv-07078, U.S. District Court, Northern District of California (San Jose).

The judge’s Oct. 13 order required OpenAI to expedite production of documents concerning the alleged theft ahead of forthcoming consumer hardware products. OpenAI is now seeking time to investigate whether Apple possesses or used the information — and to file counterclaims.

The factual answer writes itself: the most concrete hardware story in AI right now is a doughnut and a trade-secret pillow fight in front of a judge. Everything else — the $1.4T valuation, the IPO, the partnership warring with the lawsuit — is context for a product that hasn’t shipped yet.